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Chapters 8 7 9 problems

# Chapters 8 7 9 problems - What is the company’s current...

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Chapters 8 & 9 Problems Smith Corp. common stock has a beta of 1.5. The rate on the 12 month Treasury is 4%, and the expected rate on the market is 9%, what is the required rate of return for Smith Corp. stock? A stock is expected to pay a dividend of \$1 at the end of the year. The required rate of Return is 11%, and the expected constant growth rate is 5%. What is the current stock value? The XYZ Company just paid a dividend of \$1 per share, and that dividend is expected to grow at a constant rate of 5% per year in the future. The company’s beta is 1.2, the market risk premium is 5% and the risk-free rate is 3%.

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Unformatted text preview: What is the company’s current stock value? If Do = \$2.00, g (which is constant)= 6%, P0 =\$40, what is the stock’s expected dividend yield for the coming year? You must estimate the intrinsic value of ABC stock. ABC’s end of the year cash flow (FCF) is expected to be \$25 million and it is expected to grow at a constant rate of 8.5% a year thereafter. The company’s WACC is 11%. ABC has \$200 million of long-term debt plus preferred stock and there are 30 million shares of common stock outstanding. What is the estimated intrinsic value per share of the firm’s common stock....
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